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Corporate Finance Homework Help! 3 Questions. Help with either, or all- PLEASE!!!?


Question 1

If a stock is purchased for $25 per share and held one year, during which time a $1.75 dividend is paid and the price climbs to $26.75, the nominal rate of return is:


Question 2

What is the percentage return on a stock that was purchased for $40.00, paid no dividend after one year and was then sold for $39.00?

Question 3

What is the WACC for a firm with 50% debt and 50% equity that pays 12% on its debt, 20% on its equity, and has a 40% tax rate?

1) 0%

2) -1/40 = -2.5%

3) WACC = wd(1-t) + we
= 0.5*0.12*0.6 + 0.5*0.2
= 13.6%

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